NEW YORK: Gold slipped on Thursday, heading for its worst quarter in five as a hawkish tone from global central banks dimmed appeal for the non-yielding asset.
Spot gold fell 0.3% to $1,811.95 per ounce by 12:06 p.m. EDT (1606 GMT), on track to fall more than 6% for the quarter. US gold futures slipped 0.2% to $1,813.40.
“Gold is ending lower this quarter due to the tighter Federal Reserve policy suggestions. Also, there’s a good chance that recession worries will bring down demand across commodities,” said Jim Wyckoff, senior analyst at Kitco Metals.
Bringing down high inflation will be painful and could even crash growth, but it must be done quickly to prevent rapid price growth from becoming entrenched, the world’s top central bank chiefs said at the European Central Bank’s annual conference in Portugal.
The dollar index hovered near its recent two-decade peak and was headed for a 6% rise this quarter, making gold more expensive for overseas buyers.
Gold briefly bounced after US data showed the personal consumption expenditures price index rose 6.3% in May after advancing by the same margin in April. However, gold prices quickly moved back into the tight range it has been in for the past few sessions.
“The data initially gave traders the idea that since inflation wasn’t any worse than last month, maybe the Fed won’t be so aggressive, helping gold. However, the market is still firmly bearish and speculative sellers jumped in to push prices down,” added Wycoff.
Gold usually benefits from high inflation, but rising rates translate into higher opportunity cost of holding the non-interest bearing asset.
Spot silver fell 1.3% to $20.43 per ounce, while platinum dropped 1.7% to $901.44.
Palladium was 3.8% lower at $1,888.09.
“If you’re talking recession, it means less automotive production and industrial activity; this is hurting palladium,” said Bart Melek, head of commodity strategies at TD Securities.